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Trade Findings and Adjustments 03-23-2021

Trade Findings and Adjustments 03-23-2021

Leap Long Calls

Long Calls = Buy to Open = Right to buy the stock at a certain price (strike price) for a certain period of time

The Idea = Makes money when the stock trades/moves bullish

IT is a stock replacement strategy

LEAPS are a type of options contract with expiration dates longer than one year. The main benefits of a LEAPS option are:

  • The ability to use less capital when compared to owning the actual stock.
  • You can use a longer time frame allowing you to not worry about the short-term volatility of the trade.
  • Hedge risk in a trade over a longer time frame.

AAPL currently trading @ $122.45 which every penny is at risk

IF you use the leap long call for $21 cost basis every penny is also at risk

Would you rather lose $122 or $21 ANSWER 21

21/122.45 = 17.14% of the value of the stock is at risk

You’ve hedged 82.86% of the risk of owning stock

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